Options Trading Opportunity in Volatile Market

For some people, volatile market is very scary and they tend to run away. However, there are quite a number of them also believe that there are huge opportunities to trade in a volatile market. For me, it all depends on your believe and conviction. If you see this situation is an opportunity to trade, you will get it. But don't forget that you must have trading methodology, money management, and discipline, otherwise you plunge yourself on gambling trading situation.

Below are the situations that create opportunity in Options Trading:

- Market is very Liquid.
I like to trade on liquid market. On current volatile market, the liquidity is there and spread bid/ask is on penny. Therefore, it allows me to get in and out easily and reduce my slippage.
- The volatility is high.
When volatility is very low, we only see dry paint picture on our screen. This current volatility provides excitement on trading. When volatility is very high and everybody is scared, to be a contrarian, I always want to be an insurance provider.
- When market is on choppy trading, there is tendency price spike one to the other very wide. You can take your safely spot (strike price) and put a limit order (with acceptable risk/reward). Be patient and market will consequently grab you. So, you will be a liquidity provider to the market.

This is a one lifetime opportunity to see volatile market like this. If you can survive trading on this market, you will be a better trader tomorrow. Therefore, dare to step in is the course of action that you need to do. Only watching on the sidelines does not do any good. You just see things are moving back and forth which does not mean anything.

Options Trading - in Volatile Market (part 2)

One of forum member commented that he could not get filled when he wanted to close his position. He was very upset since he got quite a big loss since he could not cover his position fast.

Later, I found that he traded stock that trade very thinly. During volatile market like this, it is very important to find stocks that very liquid. If you used to trade with volume stock above 1 million shares, you have to seek stock with volume more than 3 million shares. Liquidity is one main important keys on options trading in volatile market. You have to ensure that bid-ask very tight so you avoid any slippage. Bigger spread means you reduce your profitability and this will not make you around very long to trade on this situation.

So, consider this advise, look for LIQUIDITY with the underlying assets that you trade, especially on this bear market/volatile market.